Correlation Between Alger Smidcap and John Hancock
Can any of the company-specific risk be diversified away by investing in both Alger Smidcap and John Hancock at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Alger Smidcap and John Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Smidcap Focus and John Hancock Global, you can compare the effects of market volatilities on Alger Smidcap and John Hancock and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alger Smidcap with a short position of John Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Smidcap and John Hancock.
Diversification Opportunities for Alger Smidcap and John Hancock
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alger and John is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Alger Smidcap Focus and John Hancock Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Hancock Global and Alger Smidcap is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alger Smidcap Focus are associated (or correlated) with John Hancock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Hancock Global has no effect on the direction of Alger Smidcap i.e., Alger Smidcap and John Hancock go up and down completely randomly.
Pair Corralation between Alger Smidcap and John Hancock
Assuming the 90 days horizon Alger Smidcap Focus is expected to generate 2.44 times more return on investment than John Hancock. However, Alger Smidcap is 2.44 times more volatile than John Hancock Global. It trades about 0.2 of its potential returns per unit of risk. John Hancock Global is currently generating about 0.09 per unit of risk. If you would invest 1,322 in Alger Smidcap Focus on September 6, 2024 and sell it today you would earn a total of 217.00 from holding Alger Smidcap Focus or generate 16.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Alger Smidcap Focus vs. John Hancock Global
Performance |
Timeline |
Alger Smidcap Focus |
John Hancock Global |
Alger Smidcap and John Hancock Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alger Smidcap and John Hancock
The main advantage of trading using opposite Alger Smidcap and John Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Smidcap position performs unexpectedly, John Hancock can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in John Hancock will offset losses from the drop in John Hancock's long position.Alger Smidcap vs. Alger Midcap Growth | Alger Smidcap vs. Alger Midcap Growth | Alger Smidcap vs. Alger Mid Cap | Alger Smidcap vs. Alger Dynamic Opportunities |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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